Mexico has been on fire recently in the news,as evidenced by the latest report from Zacks,which begs the question, “Can Mexico Become the New China?” Not only is Mexico real estate hotter than ever,but as the analysts at Zacks point out,Mexico’s manufacturing sector has been giving China some fierce competition over the last year or so,with no signs of slowing down anytime soon.
“China’s average manufacturing wages,when adjusted for productivity,are above those in Mexico now,” writes Zacks,citing a study conducted by respected Boston Consulting Group (BCG). “BCG forecasts that by 2015,the fully loaded cost of hiring Chinese workers will be 25 percent higher than the cost of hiring Mexican workers.”
This is significant for Mexico’s continued performance on the world stage,which has been increasingly impressive over the recent months,as evidenced by a landslide of positive press. Much of the nation’s success lies in the fact that it is perfect positioned,geographically speaking,to facilitate trade with the U.S.,which is still the world’s largest economy. From locations throughout Mexico,international corporations can easily ship a variety of goods to cities in the U.S. both more quickly and at a much more affordable rate than that of shipping goods all the way from China. In addition,thanks to NAFTA goods coming into the U.S. from Mexico can cross the border duty-free,which is an additional significant savings.
When it comes to demographics,Mexico is also coming out ahead of China,with a workforce that is largely young and a median age of 26,compared to China’s median age of 33.2 and comparatively aging population. According to the report,China’s one-child policy is believed to play a significant role in this phenomenon,which is only expected to worsen over the coming years,compared to Mexico’s demographics,which are expected to continue to provide a strong workforce.
All of these factors have already started to lure U.S. manufacturers from China to south of the border in an effort to take advantage of all that Mexico has to offer. In addition,according to Zacks,in 2011 Mexico’s manufactured exports already amounted to more than all of the other countries in Latin American combined.